Shares of Amazon.com Inc. (AMZN) declined 0.9% during Thursday's regular trading session, closing at $202.34. The dip followed reports from Reuters that Italian tax authorities conducted searches at the e-commerce giant's offices in Milan. The investigation, part of a fresh probe into potential tax evasion, also extended to the private residences of seven Amazon managers and the offices of audit firm KPMG.
Prosecutors are examining whether Amazon maintained an undeclared "permanent establishment" in Italy from 2019 through 2024, a designation that could carry significant tax liabilities. This development arrives shortly after the company agreed in December to a €510 million settlement to resolve a separate Italian tax dispute. Amazon has not yet issued a public comment regarding the new investigation.
The stock has faced substantial pressure throughout February, recording seven consecutive daily losses and a cumulative decline of approximately 16% for the month. This sell-off has erased nearly $400 billion in market capitalization, according to data from Dow Jones Market Data provided to Barron's.
Beyond regulatory scrutiny, investors are closely evaluating Amazon's aggressive capital expenditure strategy, particularly its focus on artificial intelligence. The company is reportedly planning around $200 billion in AI-focused investments for 2026, earmarked for data centers, semiconductor procurement, and related infrastructure to bolster its cloud computing division, Amazon Web Services (AWS).
Some analysts express concern that Amazon is playing catch-up in the AI race. D.A. Davidson analyst Gil Luria noted the company appears to be "losing the lead" in cloud computing and is now "scrambling to catch up through escalating investment" as rivals Microsoft (MSFT) and Alphabet (GOOGL) advance their own AI ambitions. The key question for investors is whether this massive spending will translate into accelerated AWS growth and improved cash flow quickly enough to justify the outlay.
In other business developments, Amazon continues to expand its healthcare footprint. Its pharmacy division announced plans on Wednesday to extend same-day prescription delivery to roughly 4,500 U.S. cities and towns by year-end, expanding coverage by nearly 2,000 new communities. Additionally, a recent regulatory filing revealed that a wholly-owned Amazon subsidiary holds an 11.75 million share stake, representing 5.3%, in electric aircraft manufacturer BETA Technologies.
The broader market showed modest gains, with the S&P 500 and Nasdaq Composite opening higher and the Dow Jones Industrial Average posting a slight advance. Macroeconomic conditions remain a backdrop, with recent U.S. initial jobless claims data indicating a steady labor market. High Frequency Economics chief economist Carl Weinberg observed that claims figures remain "well within the recent range over the last two years."
Looking ahead, investor attention will be divided between the ongoing Italian probe and the upcoming release of the January U.S. Consumer Price Index data. The core challenge for Amazon is navigating these simultaneous pressures: managing potential financial penalties in Europe while demonstrating that its colossal AI investments are beginning to yield tangible, profit-driving results. Any shortfall on either front could leave the stock vulnerable to continued volatility.
